ARS INTERNATIONAL FZE
COMEX RULE VIOLATIONS: 432. GENERAL OFFENSES
It shall be an offense:
W. for any party to fail to diligently supervise its employees and agents in the conduct of their business relating to the Exchange.
534. WASH TRADES PROHIBITED
No person shall place or accept buy and sell orders in the same product and expiration month, and, for a put or call option, the same strike price, where the person knows or reasonably should know that the purpose of the orders is to avoid taking a bona fide market position exposed to market risk (transactions commonly known or referred to as wash sales). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades. Additionally, no person shall knowingly execute or accommodate the execution of such orders by direct or indirect means.
Pursuant to an offer of settlement, ARS International FZE (“ARS”) presented at a hearing on September 17, 2014, in which ARS neither admitted nor denied the rule violation upon which the penalty is based, a Panel of the Commodity Exchange Business Conduct Committee (“BCC”) found it has jurisdiction over ARS pursuant to COMEX Rules 400 and 418 and that between November 21, 2012 and December 20, 2012, two ARS traders entered a series of wash trades in Silver options between accounts with the same beneficial owner. ARS failed to diligently supervise its traders in a manner sufficient to ensure that they were familiar with Exchange rules.
The Panel found that as a result, ARS violated Rules 432.W and 534.
In accordance with the settlement offer, the Panel ordered ARS to pay a fine to the Exchange in the amount of $40,000.
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